Why do people rebalance their portfolios?

I've never rebalanced my portfolio. Because of this, I'm slowly acquiring more stocks through the years, but I'm making more money. Why does one rebalance other than if they can't stomach the risk? I know the rebalance theory is to sell the overflow when prices are high and buy when prices are low. Is this the only reason people rebalance? To me, it doesn't seem as profitable as acquiring more stocks.

Retirement, Retirement Savings, Asset Allocation, Stocks
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2 weeks ago

Rebalancing is a risk tool. When you establish an asset allocation that meets your objectives then rebalancing will force you to add risk when prices are low and will force you to trim back risk when prices have outpaced other assets within your diversified portfolio.

Without rebalancing your portfolio will continue to get concentrated in risk assets and will force your hand at some point in time to make a decision on when to reduce risk.  That also makes the assumption that your risk assets always go up and never go down.  People that did not rebalance the portfolios in the late 90s learned a hard lesson. So did those that got overly concentrated in real estate prior to 2007.

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